An arbitral tribunal cannot release property without preserving a contractually mandated consolidated allocation.

The appellants and Respondent No. 1 were parties to a Collaboration Agreement dated 29 October 2010 concerning development of land at Village Sihi, Gurugram.

Under Clause 8, the owners were entitled to earmark their share—stated to be 22% of the sanctioned FAR and claimed by the appellants to be up to 30%—in “one consolidated block” in the proposed project.

The High Court had earlier directed maintenance of status quo regarding title and possession on 17 January 2025, which continued before the arbitral tribunal as interim protection under Section 17 of the Arbitration and Conciliation Act, 1996.

By order dated 11 August 2026, the Sole Arbitrator modified the status quo order and restrained the respondents from selling, transferring or creating third-party rights only in the areas marked Yellow and Orange, together with Restaurants 6 and 7 on the third floor of Block 1, while releasing the remainder of the project from restraint.

Whether the Arbitral Tribunal, while modifying the interim status quo order, failed to consider the appellants’ prima facie contractual right under Clause 8 to earmark their entitlement in one consolidated block

Whether protection of selected Yellow, Orange and Blue areas, based primarily on percentage calculations, adequately preserved the subject matter of the arbitration and the enforceability of any final relief

Whether the tribunal’s omission to address the consolidated-block requirement constituted perversity, arbitrariness or manifest illegality warranting interference under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996

The Court applied Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, read with Section 13 of the Commercial Courts Act, 2015, which permits appellate interference with an order under Section 17 where it suffers from perversity, arbitrariness or manifest illegality, subject to the narrow scope of review applicable in such proceedings.

Section 17 principles require interim protection to preserve the subject matter of arbitration and ensure that eventual relief does not become incapable of implementation.

The Court also applied the contractual rule embodied in Clause 8 of the Collaboration Agreement: the owners’ entitlement was not merely a quantified percentage of fungible saleable area, but an entitlement that could be earmarked in one consolidated block.

The tribunal was therefore required to consider not only the quantum of the claimed entitlement but also the contractually stipulated manner of allocation.

The Court found that the Sole Arbitrator reproduced Clause 8 but did not analyse its operative requirement that the owners’ share be earmarked in one consolidated block.

Instead, the tribunal calculated the areas marked Yellow and Orange, added limited Blue areas, and treated the aggregate—approximately 27.29% of the saleable area—as sufficient interim protection.

This approach addressed only the possible percentage entitlement of 22% or 30% and did not determine whether the selected areas satisfied the appellants’ asserted right to a consolidated allocation.

The Court held that the respondents could not unilaterally select scattered areas and simultaneously obtain release of the remaining project without the tribunal first considering whether such release would make the alleged Clause 8 right incapable of enforcement at the final stage.

Although the tribunal could reduce an overbroad status quo order, it had to preserve the subject matter of the arbitration in a manner consistent with the contractual allocation mechanism.

The failure to address that material consideration went to the root of the interim controversy and constituted an error attracting Section 37(2)(b) interference.

The Court did not finally decide the validity of the 2019 allocation, the alleged forgery, or whether the appellants were entitled to 22% or 30%; those matters were left for determination by the arbitral tribunal.

The appeal under Section 37(2)(b) was allowed, and the Sole Arbitrator’s order dated 11 August 2026 was set aside.

The appellants were granted liberty to raise the entitlement issue before the arbitral tribunal, which was directed to adjudicate the disputes independently and on their own merits, uninfluenced by the observations in the High Court’s judgment.